3. The Fred Proffet Company has been in the contract food service management business for many years. Their clients choose the Proffet Company for its creativity and attention to detail. Allisha McKay is the person who prepares the summary of sources and uses of funds for the Proffet Company. Help her do that by using the balance sheets that follow to calculate the company's sources and uses of funds, using arrows to indicate the differences where appropriate, and then answer the questions that follow. The Fred Proffet Company Balance Sheets December 31, Last Year and This Year Last Year ($) This Year ($) + Sources Uses ASSETS Current Assets Cash Marketable Securities Net Receivables Inventories 336,000 1,240,000 1,520,000 844,000 350,000 1,200,000 1,550,000 830,000 (continued) Total Current Assets 3,940,000 3,930,000 1,200,000 420,000 1,500,000 525,000 Property and Equipment Less Accumulated Depreciation Net Property and Equipment 780,000 975,000 TOTAL ASSETS 4,720,000 4,905,000 LIABILITIES AND OWNERS EQUITY Current Liabilities Accounts Payable Notes Payable Other Current Liabilities Total Current Liabilities 584,000 134,000 636,000 1,354,000 565,000 90,000 300,000 955,000 Long-Term Liabilities Long-Term Debu Total Liabilities 720,000 2,074,000 1,100,000 2,055,000 Owners' Equity Common Stock Paid in Capital Retained Earnings Total Owners' Equity 300,000 1,200,000 1,146,000 2,646,000 320,000 1,280,000 1,250,000 2,850,000 4,720,000 4,905,000 TOTAL LIABILITIES AND OWNERS' EQUITY TOTAL SOURCES AND USES OF FUNDS a. Did the change in cash reflect a source or a use of funds? What was the amount of that change? b. Did the change in net receivables reflect a source or a use of funds? What was the amount of that change? c. Did the change in notes payable reflect a source or a use of funds? What was the amount of that change? d. Did the change in retained earnings reflect a source or a use of funds? What was the amount of that change? e. What was the total amount of sources and uses of funds? 4. Now that Allisha McKay (see Question 3) has compiled the sources and uses of funds information she needs, she is ready to prepare The Fred Proffet Company's SCF for this year. Help her complete the company's SCF by using the information taken from the following Condensed Income Statement and Statement of Retained Earnings for This Year, as well as This Year and Last Year's Balance Sheets shown in the previous Question 3. Then, answer the questions that follow: The Fred Proffet Company Condensed Income Statement and Statement of Retained Earnings For the Period: January 1 through December 31, This Year SALES Cost of Sales Labor PRIME COSTS Other Operating Expenses (excluding depreciation) Depreciation OPERATING INCOME Interest INCOME BEFORE INCOME TAXES Income Taxes NET INCOME $5,200,000 1,560,000 1.456,000 3,016,000 1,404,000 105,000 675,000 242,000 433,000 173,000 260,000 STATEMENT OF RETAINED EARNINGS Retained Earnings, December 31, Last Year Net Income for This Year Subtotal Cash Dividends Paid This Year Retained Earnings, December 31, This Year 1,146,000 260,000 1,406,000 156,000 $1,250,000 The Fred Proffet Company Statement of Cash Flows December 31, This Year NET CASH FLOW FROM OPERATING ACTIVITIES Net Income Adjustments to reconcile net income to net cash flows from operating activities Depreciation Increase in Net Receivables Decrease in Inventories Decrease in Accounts Payable Decrease in Other Current Liabilities Net Cash Flow from Operating Activities NET CASH FLOW FROM INVESTING ACTIVITIES Decrease in Marketable Securities Increase in Property and Equipment Net Cash Flow from Investing Activities (continued) (Continued) NET CASH FLOW FROM FINANCING ACTIVITIES Decrease in Notes Payable Increase in Long-Term Debt Increase in Capital Stock (Common Stock + Paid in Capital) Dividends Paid Net Cash Flow from Financing Activities Net Increase in Cash This Year Cash at the beginning of This Year Cash at the end of This Year SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for Interest Income Taxes a. What is Allisha's proper entry for Net Cash Flow from Operating Activities? b. What is Allisha's proper entry for Net Cash Flow from Investing Activities"? c. What is Allisha's proper entry for Net Cash Flow from Financing Activities"? d. What is Allisha's proper entry for Net Increase in Cash This Year"? e. Since all changes in cash are accounted for in the SCF, what is the purpose of the "Supplementary Disclosure of Cash Flow Information" portion of the statement